If you were recently denied credit or didn't receive the low-interest rate you expected, it might have something to do with your credit score. These three digits, which typically range between 300 and 850, represent your creditworthiness and could affect your daily life along with your ability to achieve long-term financial goals. For example, phone carriers and utility companies may use your score when determining which product options will require security deposits. Lenders consider these scores before deciding whether to extend credit for home and auto loans.
Credit scores are calculated using credit history report data, which you can take steps to improve. Here are three ways you can improve your score and your financial well-being.
1. Review Your Credit History Reports
Before you can improve your credit score, you must review and understand the contents of your credit history reports. View your reports and scores within Vermont Federal's Online Banking system by navigating to the "Credit Score" section. You'll also find tips for improving and maintaining good credit health.
Besides reading recommendations for improving your credit, review each report for errors. Inaccurate late payments or accounts that do not belong to you may be wrongly included in the report. Follow each credit reporting bureau's dispute policy to have these items removed. Clearing errors from your credit report could quickly improve your credit score.
2. Pay Your Bills on Time
When you fail to pay your bills on time, it affects your credit score and can cost you money. Even one 30-day late payment can lower your credit score and result in financial penalties. Always pay at least the minimum due on your accounts each month.
If you have past-due accounts, get caught up as soon as possible by redirecting money from other unnecessary expenses in your budget. Delinquent accounts could be turned over to collections, further damaging your credit. Ensure future payments arrive on time by setting up automatic bill payments via Online Banking.
3. Keep Account Balances Low
High credit utilization rates can lower your credit score even if you pay your bills on time. Rates are typically calculated by comparing your total debt to your available credit. Credit scoring agencies recommend balances stay below 30% of your credit limit to positively affect your score.
Pay down debt to improve your rate along with your credit score. Depending on how quickly you want to improve your credit, consider working additional hours or taking a second job and directing those earnings toward high debt balances.
4. Take Advantage of Vermont Federal Credit Union Product Solutions
First time borrowers or those with past credit problems could benefit from Vermont Federal's Credit Builder Loan. This loan can help you establish credit if you are a new borrower or wish to re-establish credit and raise your overall credit score.
If credit denials have prevented you from obtaining new credit, apply for a Vermont Federal Share Secured Visa Credit Card. This low-interest rate card requires no credit check and could help you re-establish a positive credit history. The amount deposited into a share account secures your credit limit. Make purchases with the card, keep the account balance low, and monitor improvements to your credit score within Online Banking.
About Vermont Federal Credit Union
Vermont Federal Credit Union is a $900 million-plus full-service, not-for-profit, cooperative financial institution that has served Vermonters for more than 70 years, with eight locations currently serving over 50,000 members. Members are part of a cooperative, meaning they share ownership in the Credit Union and elect a volunteer board of directors. Vermont Federal Credit Union provides membership to anyone who lives, works, worships, or attends school in Vermont. Vermont Federal Credit Union is committed to supporting its communities and helping Vermonters prosper, no matter where they may be on life’s journey. Learn more about Vermont Federal Credit Union.
*Subject to credit approval.
